BofA CEO: Fed Wants Bank to Show Consistent Earnings

Bank of America Corp
needs to show the U.S. Federal Reserve it can produce
consistent earnings as part of the annual process to gain
permission to return more capital to shareholders, CEO Brian
Moynihan said in an interview.

Bank of America Corp
needs to show the U.S. Federal Reserve it can produce
consistent earnings as part of the annual process to gain
permission to return more capital to shareholders, CEO Brian
Moynihan said in an interview.

The second-largest U.S. bank is turning a profit in most of
its main businesses, but it inherited costly legal problems when
it acquired companies during the financial crisis, including
subprime mortgage lender Countrywide Financial.

In the third quarter, Bank of America reported only a
nominal profit after reaching a $2.4 billion settlement with
investors to resolve claims it hid crucial information from
shareholders when it bought investment bank Merrill Lynch & Co.

Moynihan declined to comment on whether the bank's capital
plan, which is due to the Fed by Jan. 7, will include any
proposed share buybacks or increases in dividends. Moynihan
suffered a major embarrassment in 2011 when the Fed rejected the
bank's request to increase its quarterly dividend, which has
been stuck at just one penny per share since the financial
crisis.

The Fed has been evaluating capital plans as part of its
supervision of bank holding companies and under provisions in
the Dodd-Frank financial reform law. It is unclear whether the
Fed would approve any request for an increased dividend or share
buybacks next year. A Fed spokesperson declined to comment.

"The element that is sort of unique to us is the
predictability of the earnings stream," Moynihan said in an
interview in his Charlotte, North Carolina, office. "We are
working to get through that."

Other banks have demonstrated their ability to earn money
more consistently. JPMorgan Chase & Co's quarterly
profit, for example, hasn't fallen below $3.7 billion in the
past year, even as it has taken losses on disastrous credit
derivative trades.

Investors and analysts are hopeful that Bank of America's
legal problems will die down soon. Its stock price has more than
doubled this year, partly on expectations that the bank will
increase its dividend and buy back more stock after the Federal
Reserve reviews its capital plans this spring.

Analysts at Atlantic Equities on Tuesday said they expect
Bank of America to buy back $4 billion of its own shares in 2013
and $10 billion in 2014, which would be its first buybacks since
2007.